Downtown development soars in 2013

It’s hard to argue that Columbia’s economy isn’t healthy. Investors’ appetite for downtown real estate continues to grow, and the city could look much more vertical in the coming years.

Local unemployment fell to less than 4 percent for the first time since the recession, and Columbia passed the 100,000-jobs mark. The housing market continued a healthy return to stability, and population growth remained steady.

The local tech startup scene had its share of successes, and healthy discussions are occurring about how best to help area entrepreneurs continue to grow local companies. Columbia’s new air service with American Airlines got off to a healthy start, even if it had to end an unhealthy relationship with Delta Air Lines in the process.

Of course, health care policy also left a mark locally, though that mark might not have been as healthy as some hoped.

For one, the Missouri General Assembly did not expand Medicaid, disappointing health care providers and leaving thousands without a path to health insurance coverage. And the health insurance exchanges had a rocky beginning.

As you raise a glass to your health next week, here’s some conversation fodder on the trends and stories that shaped our local economy in 2013.

DOWNTOWN DEVELOPMENT

In the past several years, downtown Columbia has become a much different place.

First, student housing developers began building large residential complexes near the University of Missouri. But others are building market-rate apartments and commercial space.

The year started with a local debate over a building that includes the oldest structure in the city, the Niedermeyer building at Tenth and Cherry streets. One developer wanted to tear it down and replace it with what would have been one of the tallest buildings in the city. Local preservationists and their allies on the Columbia City Council pushed back, proposing a moratorium on downtown demolitions until stricter zoning rules could be put in place.

The moratorium narrowly failed, and now new zoning and development rules are being crafted for the area after being debated for much of the year. But developer interest is still high: The latest building proposal would add a 25-story mixed-use high-rise to the area, forever altering Columbia’s skyline.

That and other proposals have reignited a push by city leaders to establish a tax increment financing district to capture the increasing value of downtown real estate. Instead of being divvied up for schools and other government functions, the city would use the money to update the aging infrastructure that a denser, more vertical downtown will need.

That debate is just starting. Expect it to get louder soon.

STUDENT HOUSING

Yes, it’s still coming.

Some of the projects that started earlier will open in 2014, and still others will break ground. The niche industry was an attractive one to investors in recent years, and outside investment continues to flow into Columbia as developers eye the dollars of affluent students.

Amid the growing supply of student housing complexes, the University of Missouri did not grow total enrollment for the first time in almost two decades. The first local developers to jump into the market, Jon and Nathan Odle, have stepped back, saying the market is being overbuilt. They scrapped plans for student housing at a big commercial development on the southeast corner of town.

Meanwhile, the university plans to continue efforts to grow by roughly 5,000 students to near 40,000 during the next several years. Stiff competition for a declining number of young people might make the task hard. Even so, developers hope to build digs for thousands more near the central city.

Whether it’s a bubble or a boom will be a story for 2014 and beyond.

MEDICAID EXPANSION, ACA

Lawmakers in Jefferson City spent much of this year’s regular legislative session feeling the pressure for expanding Medicaid.

The piece of the Affordable Care Act designed to cover lower-income people was, because of a 2012 U.S. Supreme court ruling on the law, contingent on state governments accepting money for expansion.

It didn’t matter that the feds would pick up the tab until 2017 and the state would only be responsible for 10 percent of the cost of expansion by 2020. Nor did it matter that Gov. Jay Nixon toured the state promoting expansion or that hospitals and their lobbyists pushed equally as hard. Even the support of the Missouri Chamber of Commerce, a traditional GOP ally, did little to convince the state’s Republican lawmakers that accepting Medicaid expansion was a good idea.

Hospitals worried that a refusal to expand would hit them especially hard because other federal payments were going away under the assumption that Medicaid would expand the customer base to make up for it. The actual effect on the state’s largest hospitals is yet to be seen — many have very healthy fund balances and extremely well-paid executives — but rural hospitals, which treat older, sicker, poorer patients, might feel a pinch. Already, some consolidation has started, and executives of small, independent hospitals expect it to accelerate if Medicaid is not expanded soon.

As for patients, more than the uncovered Medicaid population has suffered: The sloppy rollout of the online health insurance marketplaces made buying insurance on the individual marketplace impossible for at least a month. An online insurance exchange for small businesses was delayed by a year, and a small number of people with private plans found out the hard way that the president’s promise that you can keep your insurance if you like it wasn’t 100 percent accurate.

With about 245,000 Missourians below the poverty line who can’t get subsidies to purchase insurance on the exchanges and would need Medicaid expansion to get covered, legislators in Jefferson City will again be pressed to expand the program. And how new regulations and expanded insurance opportunities affect the overall health care industry will continue to play out in 2014.

OSCO GETS FULL

One of Columbians’ favorite topics for derision — before the 10-deck parking garage opened up, that is — was the former Osco Drug space near Providence Road and Broadway.

After a decade sitting vacant, it finally got a new tenant — and in the process, residents of downtown Columbia finally got the full-size grocery store they craved.

In April, Lucky’s Farmers Market announced it would open a store in Columbia, and Columbians should be able to shop for produce, meat and other staples on the edge of downtown when the store opens next month.

In addition to filling a long-vacant property, the grocery store suggests the growing population in downtown Columbia is nearing critical mass.

Although the store itself is a little unusual — it’s a new concept undergoing a large, multistate expansion using the EB5 special immigration program that grants visas for cash — it is a welcome addition by most residents to one of the fastest-growing parts of Columbia.

ENTREPRENEURSHIP

Columbia is developing a name for itself in techie circles, and the research spinoffs from the university are building the MU brand, too.

Entrepreneurship in Columbia has been embraced as the new economic development model by city leaders who realized they were spending far too much time chasing smokestacks in a post-industrial economy. The knowledge capital from MU has grown the sector, and successful stories such as Eternogen, Newsy and Veterans United continue to shine favorable light on Mid-Missouri. Local startups are building more than businesses, growing their community and networking opportunities with events such as #BOOM and weekly 1 Million Cups meetings.

Big-city investors are looking at Columbia, too, sometimes luring away the early-stage companies the area has become adept at incubating. That has some acknowledging a need for more investment capital opportunities so companies can continue growing in Columbia instead of being lured to other areas. The city, university and private sector are working together on the issue, a welcome sign for area entrepreneurs.

JAY NIXON FIGHT

Since being re-elected, Jay Nixon has started to act a lot more combative and a lot more like a Democrat.

His second big fight of the year was a statewide campaign against a large tax cut passed by the legislature that he said threatened funding for schools and higher education. With Republicans holding historic numbers of seats and close to a veto-proof majority, it was not certain his veto would stand. It was a victory for him as well as higher education institutions such as MU, which stood to lose funding if the state was forced to rebalance its budget. But don’t expect GOP lawmakers to give up after just one try.

COUNCIL LEANS LEFT

Much to the chagrin of some in the business community, the Columbia City Council took a lean to the left this April, when two of its more conservative candidates were ousted by smart-growth progressive types.

Karl Skala and Ian Thomas took the Third and Fourth Ward seats in the local election, replacing Gary Kespohl and Daryl Dudley, respectively. The latter two had formed a conservative block with Fifth Ward Councilwoman Laura Nauser and the semi-swing-vote-prone Mayor Bob McDavid. Their election added to a council already tilting back to the left after Michael Trapp took the Second Ward spot in the 2012 election after Jason Thornhill decided against seeking re-election.

The city’s more conservative wing did manage to hang onto the Fifth Ward seat after Nauser recaptured her old seat in a special election where two more progressive candidates split the vote.

Developers and real estate professionals have bemoaned council decisions such as the rejection of CVS’ plan for a downtown store, the “no” vote on Break Time’s bid for a gas station on Grindstone Parkway and the imposition of new energy-efficiency building standards.

HOUSING, AIRPORT, MFA OIL

Rounding out the 2013 list would be the continued resurgence of the local housing market. Sales have soared, and building permits have boomed. Some housing developers have even begun to fret that new housing demand is beginning to outstrip the number of available “prime” lots. Home sales and homebuilding might slow after the rebound in 2012-13, but those in the industry sound confident the market has stabilized.

American Airlines began flying out of Columbia Regional Airport in February. Although much of 2012 was spent putting together money for a revenue guarantee from local businesses, MU and local governments, this year was the real test.

So far, only in the first month did Columbia have to pony up cash for low seat counts. There have been setbacks: American Airlines’ revenue guarantee angered Delta Air Lines, and COU lost its connection to Atlanta. Frontier Airlines pulled out of Columbia in May after only several months flying to Orlando, Fla.

Even so, the city recently managed to add a second daily flight to Chicago from American in addition to the two it already has to Dallas.

Finally, MFA Oil’s acquisition activity has been notable this year, when it bought up six companies. Since hiring Mark Fenner last year, the fuel supplier and operator of convenience store chain Break Time has been buying up energy distributors and hinting that it could double its balance sheet in several years. Aside from all that, MFA Oil was in the news earlier this month for its purchase of the site in Moberly where the failed Mamtek plant would have been located.